Facebook Analyst Reports All Over the Map

The U.S. Securities and Exchange Commission's Form S-1, filled out by Facebook Inc.

It's been a week, and I've spent the morning perusing some of the analyst reports that have been issued on Facebook. The reports are from smaller firms: Several dozen underwriters have not yet released any research and will not for several weeks.

What is available, however, highlights the problem I have always had with Facebook : There is a vast disagreement over how to value the company.

The simple issue: The revenue growth is subject to a very high degree of uncertainty.

Actually, it's worse than that. Nobody really knows. Look at the variety of price targets placed on the stock this week:

From $49 to $9.50? Let's be kind and just say that this is a fairly wide distribution.

Several companies (Hudson Square, BTIG) started coverage with a "hold" rating and would not even place a price target on it.

For a company with such enormous hype, the initial commentary is very cautious. Here are a few excerpts:

Needham: "We believe FB is an option on the world. The best question for FB is how to value it."

Indigo: "We are highly skeptical of its lofty valuation ... Facebook's prospects are restricted by its lack of mobile revenues and limited ability to raise [average revenue per user]."

Morningstar: "1) The company's $38 IPO price was overvalued; and 2) the company is bound to disappoint investors over the next 12 to 18 months."

Standard and Poor's: "FB has considerable competitive advantages in the social media segment ... However, we wonder about the effectiveness of FB's advertising platform and offerings, the margins on marketing messages on mobile platforms, and risks related to access to and use of sensitive personal details."

BTIG: "Facebook usage is rapidly shifting toward mobile devices, where monetization is unproven; we believe this, too, will take time and is not without its risks."

Hudson Square: "...we cannot recommend the stock at this juncture." (It noted how valuation is high and revenues are slowing).